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Gold rates fell sharply in Indian markets on Monday, tracking a weak trend in international rates.  On MCX, gold fell 1.7% or around 950 per 10 gram to 51,037 per 10 gram, its biggest single-day fall in about 3 months. Silver on MCX tumbled 1,650 or 2.7% to 59,149 per kg. In international markets, the yellow metal was down 0.7% at $1,682 per ounce as renewed bets of sharp rate hikes by Fed lifted US dollar. The dollar index rose 0.2%, making gold costlier for buyers holding other currencies. 

Spot silver shed 1.8% to $19.74 per ounce after hitting a one-week low.

Data released last Friday showed that though US job growth slowed moderately in September, the unemployment rate dropped, signalling a resilient economy and dousing hopes of a Fed pivot anytime soon. Traders are largely expecting another 75-basis-point rate increase at the Fed meet next month.

Traders will now focus on the U.S. inflation data due later this week. Though US consumer price inflation is seen slowing a touch, the core measure is forecast to accelerate, according to economists.  While gold is often seen as a hedge against inflation, rising U.S. interest rates increase the opportunity cost of holding the non-yielding gold.

“The bullion market has slipped into negative territory, as gold has tested support of $1,700 an ounce following stronger-than-expected US labor market data. On Friday, the US Bureau of Labor Statistics said 263,000 jobs were created in September as against the expectations of around 248,000. At the same time the unemployment rate fell sharply to 3.5%, down from August’s reading at 3.7%. Economists were expecting the unemployment rate to remain unchanged," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

“Upbeat U.S. data supported the dollar index and the U.S. bond yields. Gold has support at $1682-1670, while resistance is at $1708-1716. Silver has support at $19.65-19.48, while resistance is at $20.17-20.35. In rupee terms gold has support at 51,620-51,440, while resistance is at Rs52,210, 52,350. Silver has support at 60,050-59,340, while resistance is at 61,280–61,610," he added. 

In international markets, gold prices have declined more than $350 since surging past the $2,000-mark in March, amid aggressive U.S. monetary policy tightening.

Investor interest also remained weak. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell by 2.03 tonnes on Friday, marking its biggest outflow since late September. S(With Agency Inputs)

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